Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32
Contract; performance; frustration; effect in common law of discharge by frustration.
Facts: Fairbairn, an English manufacturer, agreed to build a machine for Fibrosa, a Polish company. Before work on the machine began, Fibrosa paid a deposit to Fairbairn, as required by the contract. Fairbairn began work but, two months later, Germany invaded Poland and war broke out between England and Germany. In these new circumstances the contract could not be completed and was therefore discharged by frustration. Fibrosa requested the return of the deposit they had paid but Fairbairn refused to refund any money.
Issue: Since the contract had been frustrated, was Fibrosa entitled to reclaim the deposit?
Decision: The deposit should be repaid.
Reason: Fibrosa had received nothing from Fairbairn in exchange for the deposit, and would not receive anything now that further performance of the contract was frustrated. This amounted to a total failure of the consideration in exchange for which the deposit had been paid. In these circumstances, the deposit had to be refunded. If Fibrosa had received at least some of the work before the contract became frustrated, then they could not have reclaimed the deposit. Note: there are now legislative provisions in some Australian jurisdictions that govern frustrated contracts.